Just as consumers have become comfortable tapping or waving their credit cards or smart phones to pay for goods,
PayPal
has unveiled technology that enables consumers to pay without taking their phones out of their pockets.

One week after launching new iPhone and Android apps that allow consumers to order and pay for purchases before they set foot in stores, Paypal has taken the idea of the digital wallet a step further with PayPal Beacon. “We challenged ourselves to find a better experience than swiping a credit card," said PayPal president
David Marcus
. “We figured the only better way to pay would be to do nothing."

With Beacon, consumers who have downloaded the PayPal app need only walk into a store and when they’re ready to make a transaction the funds are then transferred securely to the merchant.

Using Bluetooth Low Energy, rather than Wi-Fi or GPS, the merchant’s Beacon hardware detects when a customer with the PayPal app walks within 10 metres of the store.

At this point, the merchant can attempt to engage the consumer with special offers, discounts or details of new products to steer them into their stores.

When customers take the bait, their photo will appear on the merchant’s compatible point-of-sale system.

Customers only need to give verbal confirmation of the transaction for the payment to go through. Customers are then sent a paperless receipt via email and text to confirm the purchase.

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The Beacon technology is Paypal’s latest attempt to replicate its large share of the online payments market in bricks and mortar stores.

By offering consumers faster and more secure ways to pay and enabling retailers to communicate directly with consumers via their smart phones, Paypal hopes to challenge the dominance of credit card companies such as ­Mastercard and Visa. The mobile payments market is estimated to reach $US90 billion ($97 billion) in 2017, compared to $US12.8 billion last year, according to Forrester Research.

But as growing numbers of consumers use smart phones to research and pay for goods, Paypal is looking at ways to enhance the functionality of smart phone apps to improve the shopping experience.

“The idea of queuing up to pay will change," Mr Clementz said.

The Beacon technology is bound to trigger concerns about consumer privacy and security.

But Mr Clementz says consumers will have control over which retailers can register their presence, if they want to be prompted with alerts and which merchants can charge them automatically. If consumers enter a store or mall and decline to check in, or ignore the prompts, no information is transmitted to PayPal or the merchant.

“It’s faster than swipe or tap and go, faster than near field communication, uses less battery power than GPS, has better accuracy and maintains privacy and security," said Mr Clementz. “The consumer is in control."

Beacon will not be available until 2014 but Paypal is unveiling the technology early and has invited app developers to come up with new ways to add value to the technology.

Apple is reportedly close to launching a similar technology for iPhones, dubbed iBeacon.

But Paypal says its Beacon technology works on iPhone and android devices.

The Beacon device or dongle is expected to sell for less than$100, making it affordable for small merchants like coffee shops and sandwich bars.